Executive Summary / Key Takeaways

• Pivotal Product Transition: REMSleep Holdings, Inc. (RMSL) is at a critical inflection point, having ceased sales of its older CPAP machines at the end of 2024 to focus entirely on its newly FDA-approved, patented DeltaWave CPAP interface, which began sales and inventory build-up in Q2 2025.
• Differentiated Technology: The DeltaWave offers significant technological advantages, including unique airflow characteristics designed for superior patient comfort, zero work of breathing, and reduced claustrophobia, directly addressing the primary concern of 89% of CPAP users.
• Severe Financial Headwinds: Despite operational expense reductions, the company faces substantial financial challenges, including an accumulated deficit of $15.64 million, recurring net losses, and a "going concern" warning, necessitating significant external financing.
• High-Stakes Commercialization: RMSL's future hinges on the successful commercialization of the DeltaWave, with a stated goal to capture 10% of the Obstructive Sleep Apnea (OSA) market within 24 months, a target that requires overcoming substantial liquidity constraints and competing against well-capitalized industry giants.
• Dilution Risk & Capital Needs: Continued reliance on dilutive convertible debt financing poses a significant risk to existing shareholders, underscoring the urgent need for new, less dilutive capital to fund operations and planned clinical trials.

The Battle for Better Sleep: RMSL's Strategic Pivot

REMSleep Holdings, Inc. operates within the dynamic and essential medical technology sector, dedicated to developing and distributing products that alleviate the burden of sleep apnea worldwide. The company's journey began with its incorporation in 2007, but its current identity was forged in 2015 with the acquisition of REMSleep LLC, marking a decisive pivot into sleep apnea solutions. This strategic shift laid the groundwork for its current focus on innovative CPAP interfaces.

The sleep apnea market is characterized by a critical challenge: patient compliance with Continuous Positive Airway Pressure (CPAP) therapy. A significant barrier to adherence is mask discomfort, with a survey in DME Business revealing that 89% of patients prioritize mask-interface comfort. This market dynamic underscores the strategic importance of user-friendly and comfortable solutions. RMSL's overarching strategy centers on addressing this core patient need through proprietary technology, aiming to carve out a meaningful share in a market dominated by larger, more established players.

DeltaWave: A Technological Leap in CPAP Interfaces

At the heart of RMSL's investment thesis is the DeltaWave CPAP interface, an innovative nasal-pillows type device designed to revolutionize patient comfort and compliance. The company secured Utility Patent 10987481 in April 2021 and Design Patent D1,17025.00 S in March 2024, protecting its proprietary design and functionality. This intellectual property forms a foundational competitive moat.

The DeltaWave's core technological differentiation lies in its unique airflow characteristics, engineered to enable patients to breathe normally without disruption. Its tangible benefits are directly aimed at improving the patient experience: it does not disrupt normal breathing mechanics, is not claustrophobic, causes zero work of breathing (WOB), minimizes or eliminates drying of the sinuses, uses less driving pressure, and allows users to feel safe and secure while sleeping. These features directly address the critical comfort issues that often lead to poor CPAP adherence. For investors, these benefits imply the potential for stronger customer loyalty, higher adoption rates, and potentially superior pricing power or market share gains in a segment where patient satisfaction is paramount. The completion of the DeltaWave's development and testing phases has also led to a significant reduction in the company's development expenses, signaling a shift from R&D to commercialization.

Strategic Commercialization and Market Ambition

The commercialization of the DeltaWave reached a pivotal milestone with FDA 510k approval on July 2, 2024. This regulatory clearance enabled RMSL to commence sales and begin building inventory for the DeltaWave during the second quarter of 2025. This launch marks a strategic pivot, as the company ceased selling its older CPAP machines at the end of 2024 to fully concentrate on its new flagship product.

Operationally, RMSL has also made adjustments, terminating a lease in Clearwater, FL, and securing a new, less expensive lease in Blackshear, GA, effective June 1, 2025. This move reflects a focus on optimizing operational costs as the company transitions. Management has articulated an ambitious goal: to capture 10% of the Obstructive Sleep Apnea (OSA) market within the next 24 months. Achieving this target, however, is contingent on securing adequate financing to support planned clinical trials and scale sales efforts.

Financial Performance: A Challenging Transition

The transition to the DeltaWave product has significantly impacted RMSL's recent financial performance. For the three months ended June 30, 2025, revenue stood at $4,824, an 82.52% decrease from $27,594 in the prior-year period. Similarly, for the six months ended June 30, 2025, revenue was $4,824, a 94.36% decline from $85,475 in the first half of 2024. This sharp decline is directly attributable to the cessation of sales of older CPAP machines and the nascent stage of DeltaWave sales. Gross margin followed a similar trend, decreasing by 80.50% and 93.60% for the respective periods.

Despite the revenue contraction, RMSL has demonstrated efforts in expense management. Professional fees decreased by 51.1% in Q2 2025 and 45.0% in H1 2025, primarily due to lower legal, accounting, and audit costs. Development expenses saw a substantial reduction of 98.9% in Q2 and 88.0% in H1, reflecting the completion of the DeltaWave's development. Lease expenses also declined significantly by 92.7% in Q2 and 48.0% in H1 following the relocation to a more cost-effective facility. General and administrative expenses decreased by 18.5% for the six months ended June 30, 2025, driven by reduced investor relations and depreciation, partially offset by increased computer and office expenses.

The company reported a net loss of $(287,772) for the three months ended June 30, 2025, an increase from $(225,599) in the same period last year. However, for the six months ended June 30, 2025, the net loss improved to $(373,260) from $(478,179) in H1 2024, primarily due to the aforementioned expense reductions. Other expenses were significantly impacted by interest expense, largely from the amortization of debt discount, and losses on the issuance and conversion of convertible debt, though partially offset by gains from changes in the fair value of derivatives. The latest TTM financial ratios underscore the severe unprofitability, with a Gross Profit Margin of -132.81%, Operating Profit Margin of -1741.75%, and Net Profit Margin of -2663.49%.

Liquidity and Capital Structure: The Going Concern Question

RMSL's financial health presents a significant challenge. As of June 30, 2025, the company reported cash of $415,975 and an accumulated deficit of $15.64 million. For the six months ended June 30, 2025, net cash used in operating activities amounted to $(251,368). These recurring losses and consistent cash burn have led management and the independent auditor to express substantial doubt about the company's ability to continue as a going concern.

The company's financing strategy heavily relies on dilutive instruments. RMSL continues to issue convertible notes payable, which convert into common stock at a discount. Several such notes were issued in late 2024 and early 2025, with one fully converted and another partially converted subsequent to the reporting period. As of June 30, 2025, the company had a significant number of potentially dilutive shares, including 5 million from Series A preferred stock, 50 million from Series B preferred stock, 600 million from Series C preferred stock, and 42.41 million from convertible debt. This reliance on dilutive capital poses a material risk to existing shareholders. Management's plan to address liquidity involves seeking funding from new investors and rigorously implementing a sales generation strategy for the DeltaWave.

Competitive Landscape: A David vs. Goliath Battle

RMSL operates in a highly competitive medical device industry, facing substantially larger and better-capitalized competitors. Key direct rivals include ResMed Inc. (RMD), Koninklijke Philips N.V. (PHG) through its Respironics division, Fisher & Paykel Healthcare Corporation Limited (FPH), and Inspire Medical Systems Inc. (INSP).

ResMed, a market leader, boasts an established brand, extensive global distribution networks, and a focus on connected health technologies. Its TTM Gross Profit Margin of 0.59 and Operating Profit Margin of 0.33 highlight its strong financial performance and operational efficiency, a stark contrast to RMSL's negative margins. Philips, with its integrated health solutions and global presence, also presents a formidable challenge, leveraging advanced technological integration and diversified revenue streams. Fisher & Paykel specializes in humidified systems and patient-centric designs, demonstrating healthy margins (Gross Profit Margin 0.50, Operating Profit Margin 0.28) and strong international sales. Inspire Medical, while focusing on implantable devices, represents a cutting-edge alternative that could draw patients away from traditional CPAP.

RMSL's competitive advantage lies in the differentiated technology of its DeltaWave interface, specifically its focus on superior patient comfort and compliance. This niche innovation could appeal to a segment of the market dissatisfied with existing solutions. However, RMSL's smaller operational scale and limited R&D resources compared to these giants could result in higher costs per unit and lower margins, making it challenging to compete on price or rapidly iterate products. The company's concentration of credit risk, with all accounts receivable due from one customer, also represents a vulnerability. Furthermore, a disclosed weakness in disclosure controls and procedures due to a lack of segregation of duties indicates internal operational challenges that larger, more mature competitors are less likely to face. While stringent regulatory barriers to entry protect RMSL's patented technology, these same barriers often favor larger players with greater resources to navigate complex approval processes and scale production.

Conclusion

REMSleep Holdings, Inc. stands at a pivotal moment, betting its future on the innovative DeltaWave CPAP interface. The company's history of strategic evolution has culminated in a product with clear technological differentiation, directly addressing a critical unmet need for patient comfort and compliance in the sleep apnea market. The DeltaWave's patented design and unique airflow characteristics offer a compelling value proposition that could disrupt a segment of this essential healthcare sector.

However, the path to profitability is fraught with significant financial challenges. The substantial accumulated deficit, recurring net losses, and explicit "going concern" warning underscore the urgent need for successful commercialization and robust capital infusion. While management has initiated cost-cutting measures and articulated an ambitious market share target, the company's reliance on dilutive financing and its smaller scale relative to well-capitalized competitors present formidable hurdles. For investors, RMSL represents a high-risk, high-reward proposition. The long-term viability hinges on management's ability to swiftly translate the DeltaWave's technological advantages into sustained sales growth, secure non-dilutive funding, and execute flawlessly against a backdrop of intense competition and significant liquidity constraints. The next several quarters will be critical in determining if RMSL can fulfill its promise and establish a sustainable foothold in the competitive sleep apnea market.